Why Canadian Millennials Are the XEQT Generation: How Index Investing Became the Default

A few months ago I was at a friend’s birthday dinner – one of those long-table situations at a restaurant where you end up talking to people you only half-know. The usual topics came and went. Housing. Jobs. Whether anyone had actually watched the show everyone was pretending to have watched. And then, somewhere between the appetizers and the mains, the conversation drifted to investing.

Not in the hushed, almost embarrassed way our parents talked about money. It just came up casually, the way you would mention a podcast or a recipe. “Yeah, I just auto-invest into XEQT every payday.” Someone else nodded: “Same, except I do VEQT because I like Vanguard’s vibe.” A third person chimed in: “I was doing individual stocks for a while, but honestly, I just switched everything to XEQT last year. Way less stressful.”

I looked around the table. Eight people in their late 20s to late 30s. Six of them held XEQT or VEQT. One held a mix of broad-market ETFs. One was still mostly in a savings account but had been “meaning to open a Wealthsimple.” Not a single person mentioned a financial advisor. Not one person brought up a bank mutual fund. Nobody was trying to pick the next Shopify.

And it hit me: When did this happen? When did an all-in-one equity ETF become the default investment for an entire generation of Canadians?

Because it has. If you spend any time on r/PersonalFinanceCanada, Canadian financial Twitter, or just talk to your friends, the pattern is unmistakable. XEQT – or its Vanguard sibling VEQT – has become the “just do this” answer for an entire cohort of young Canadian investors. It is the financial equivalent of what Netflix did to cable TV or what Spotify did to buying CDs. The previous model has not disappeared entirely, but the default has shifted so completely that the old way now requires explanation.

This post is about how that happened. How an entire generation rejected the way their parents invested, embraced a radically simpler approach, and turned a single ETF ticker into a cultural phenomenon. And what it means for you if you are part of this shift – or thinking about joining it.

1. How Our Parents Invested (And Why We Rejected It)

To understand why millennials gravitated so hard toward XEQT, you have to understand what we were reacting against. Because the millennial investing revolution is not just about what we chose – it is about what we refused to accept.

The Bank Mutual Fund Era

For most of our parents, “investing” meant sitting down with someone at their bank branch. A person with a title like “Financial Advisor” or “Investment Specialist” – who was, in reality, a salesperson with a sales quota – would recommend a portfolio of mutual funds. Not just one or two funds. A sprawling collection of 10, 15, sometimes 20+ funds with names designed to sound sophisticated and reassuring. The “Canadian Balanced Growth Fund.” The “North American Dividend Opportunity Fund.” The “Global Strategic Income Fund.”

Each of these funds charged management expense ratios (MERs) of 2% to 2.5%. Sometimes higher. On a portfolio of $100,000, that is $2,000 to $2,500 per year – every year – regardless of whether the fund went up or down. Over a 30-year career of investing, those fees could easily consume a third or more of your total investment returns.

And here is the part that makes it worse: most of those expensive funds did not even beat the market index they were benchmarked against. Study after study – from S&P Dow Jones, from Morningstar, from academia – has shown that roughly 80% to 90% of actively managed Canadian equity funds underperform their benchmark index over any 10-to-15-year period. Your parents were paying premium prices for below-average results.

“Financial Advisors” Who Were Really Salespeople

The person at the bank was not a fiduciary. They were not legally required to act in your parents’ best interest. They were required to recommend products that were “suitable” – a much lower bar. And they were financially incentivized, through commissions and trailer fees, to recommend the bank’s own high-fee products over cheaper alternatives.

This was not a secret, exactly. But it also was not obvious. The fee structures were buried in prospectuses nobody read. The conflicts of interest were hidden behind professional titles and polished offices. Your parents trusted the system because why wouldn’t they? The bank had been holding their money since they were teenagers. Surely the bank’s “advisor” was on their side.

Complex Portfolios That Nobody Understood

The result of all this was portfolios of staggering, pointless complexity. I have seen people’s parents holding 15 to 20 different mutual funds, many of which overlapped significantly in their underlying holdings. Three different “Canadian equity” funds that all held the same banks and energy companies. Two “international” funds that both owned Nestle and Toyota. A “balanced” fund and a “growth” fund whose actual asset allocations were nearly identical.

The complexity served the industry, not the investor. More funds meant more fees. More funds meant more “advice” needed. More funds meant the investor felt dependent on their advisor to manage it all. It was a system designed to be opaque, expensive, and sticky.

The 2008 Wake-Up Call

And then came 2008.

Millennials were roughly 12 to 27 years old during the global financial crisis. We were old enough to understand what was happening but young enough that it shaped our worldview rather than just our portfolios. We watched our parents’ retirement savings crater by 30% to 40%. We watched the banks get bailed out while regular people lost their homes. We watched “expert” fund managers, who had charged hefty fees for their supposed skill, prove no better at predicting the crash than a coin flip.

For many of us, 2008 was the moment when the old model lost its legitimacy. Not because markets crashed – markets always crash eventually, and they always recover. But because the crash revealed that the entire apparatus of expensive active management, conflicted advice, and opaque fee structures did not protect anyone when it mattered most. It just enriched the intermediaries.

We decided there had to be a better way. And we went looking for it.

2. The Perfect Storm: 5 Forces That Created the XEQT Generation

The shift from bank mutual funds to XEQT did not happen because of one thing. It happened because five separate forces converged at exactly the right time, creating a perfect storm that fundamentally changed how young Canadians invest.

Force 1: The Fee Transparency Revolution

In 2016 and 2017, Canada’s Client Relationship Model Phase 2 (CRM2) regulations came into full effect. For the first time, investment firms were required to show clients – in actual dollar amounts, not just percentages – exactly how much they were paying in fees.

This was a watershed moment. For decades, Canadians had been paying mutual fund fees without ever seeing a clear dollar figure. A 2.2% MER on a $200,000 portfolio sounds abstract. But “you paid $4,400 in fees this year” hits different. Especially when the fund lost money that year and you still paid $4,400.

The CRM2 disclosures did not cause an overnight revolution. But they planted a seed. Suddenly, Canadians were searching “why are my investment fees so high” and “how to reduce investment fees in Canada.” And every search led them to the same answer: low-cost index ETFs.

Force 2: Commission-Free Trading

For decades, buying an ETF at a traditional brokerage meant paying a commission of $5 to $10 per trade. For someone investing $500 a month, a $10 commission represented a 2% drag on every purchase – which partially negated the fee advantage of ETFs over mutual funds.

Then Wealthsimple Trade launched commission-free stock and ETF trading for Canadians. No commissions. No minimums. A clean, mobile-first interface that felt like it was designed for people who had grown up with smartphones, not people who had grown up with fax machines.

The impact was enormous. Commission-free trading removed the last practical barrier to ETF investing for small, regular contributions. Suddenly, you could invest $50, $100, $500 per payday into XEQT without any friction costs. The playing field between a millennial with $500 and a boomer with $500,000 was, for the first time, essentially level.

Other brokerages followed – National Bank Direct Brokerage went commission-free, and the major banks quietly reduced their ETF commissions. But Wealthsimple got there first and captured the generation.

Force 3: The Rise of Financial Literacy on Social Media

Previous generations learned about investing from their bank advisor, their parents, or maybe a newspaper column. Millennials learned from the internet.

Specifically, they learned from communities like r/PersonalFinanceCanada on Reddit, which became a de facto investing classroom for hundreds of thousands of young Canadians. The subreddit’s recommended reading list, its wiki, its endless stream of “I’m 27 with $30,000 saved, what should I do” posts – all of them pointed in the same direction. Low-cost index ETFs. XEQT or VEQT. In a TFSA or RRSP. Every payday. Done.

YouTube channels like Canadian in a T-Shirt, Brandon Beavis, and Ben Felix gave people visual, accessible explanations of concepts like MERs, asset allocation, and the evidence against active management. Canadian financial bloggers – from the original Canadian Couch Potato to newer voices – created a deep library of content making the case for index investing.

The message was remarkably consistent across every platform: stop paying high fees, stop trying to pick stocks, buy a diversified low-cost index fund, and get on with your life. When every independent voice is saying the same thing, and the only people disagreeing are the ones who profit from the old model, the conclusion becomes obvious pretty fast.

Force 4: All-in-One ETFs Making It Ridiculously Simple

Here is the thing people forget: before XEQT and VEQT launched in 2019, index investing in Canada was simple but not that simple. The classic Canadian Couch Potato portfolio required you to buy three or four separate ETFs – a Canadian equity ETF, a US equity ETF, an international equity ETF, and maybe a bond ETF. You had to decide on your allocation percentages. You had to rebalance periodically. You had to deal with currency hedging decisions. It was not hard, but it was just enough friction to stop people from starting.

Then iShares launched XEQT (and XGRO, XBAL, and the rest of the asset allocation ETF family) and Vanguard launched VEQT (and VGRO, VBAL). Suddenly, the entire portfolio construction problem was reduced to a single decision: how much equity do you want? Pick 100% equity? Buy XEQT. Done. One ticker. One fund. Automatic diversification across Canada, the US, international developed, and emerging markets. Automatic rebalancing. A 0.20% MER.

This was the final piece. All-in-one ETFs took an already compelling intellectual argument – “index investing beats active management” – and removed every remaining practical barrier. You did not need to understand asset allocation theory. You did not need to rebalance. You did not need to make any decisions after the initial purchase. Just buy XEQT, set up auto-invest, and go live your life.

Force 5: The Housing Affordability Crisis

This one is less obvious, but I think it is crucial. Canada’s housing affordability crisis, which accelerated sharply from 2020 to 2023, fundamentally changed how an entire generation thinks about building wealth.

For our parents, the default wealth-building strategy was simple: buy a house, pay off the mortgage, watch the value go up. Investing in the stock market was a secondary priority. The house was the retirement plan.

For millennials, especially those in Toronto, Vancouver, and other major cities, that playbook is no longer available. When the average home requires a six-figure down payment and a household income of $180,000+ to qualify for the mortgage, “just buy a house” is not a financial plan – it is a fantasy.

So what do you do when the traditional Canadian wealth-building path is closed? You find a new one. And for millions of millennials, that new path is: maximize your TFSA and FHSA, fill it with XEQT, invest consistently, and build wealth through the stock market instead of through real estate. It is not what we planned, but it works. The math supports it. And once you accept that you are building wealth through investing rather than through homeownership, XEQT becomes the obvious vehicle.

3. By the Numbers: The Millennial Investing Shift

The generational investing shift is not just anecdotal. The data is striking.

A few of these numbers deserve special attention.

XEQT’s growth is extraordinary. Going from roughly $600 million in assets at the end of 2020 to over $8 billion by mid-2026 represents a growth rate that far exceeds overall market appreciation. That is billions in net new money flowing in from investors. People are not just holding XEQT – they are actively choosing it, month after month, paycheque after paycheque.

The mutual fund decline is equally telling. For the first time in modern Canadian history, the traditional mutual fund industry is experiencing sustained net outflows. Money is leaving bank mutual funds and flowing into low-cost ETFs. This is not a blip. It is a structural shift in how Canadians invest. And it is being driven overwhelmingly by younger investors who never bought into the old model in the first place.

Wealthsimple’s growth is a proxy for the entire movement. When a commission-free investing app goes from startup to 4+ million users – in a country of 40 million people – it tells you something profound about what an entire generation wants from their financial lives. They want simplicity, transparency, low fees, and control. XEQT delivers all four.

4. Why XEQT Specifically Won the Millennial Vote

Among the all-in-one ETFs available to Canadians, XEQT has emerged as the clear favourite among millennial investors. VEQT is popular too, and functionally nearly identical – but XEQT has captured a slightly larger share of both assets and mindshare. Here is why.

Brand Recognition and Trust

XEQT is managed by BlackRock through its iShares brand – the largest ETF provider in the world. For a generation that grew up watching financial institutions fail and fund managers underperform, there is something reassuring about the sheer scale and transparency of BlackRock’s index operations. iShares ETFs are used by institutional investors, pension funds, and individual investors worldwide. You are not buying some niche product from a startup. You are buying into the most established ETF infrastructure on the planet.

The MER Sweet Spot

XEQT’s MER of 0.20% hits a sweet spot that makes the value proposition immediately obvious. On a $100,000 portfolio, you pay $200 per year. Compare that to a typical Canadian mutual fund charging 2.2%, which costs $2,200 per year on the same portfolio. You are paying roughly one-tenth the fees for broadly similar (and often better) market exposure. The fee savings over a career of investing are staggering.

“Just Buy XEQT” Became a Meme

In online Canadian investing communities, “just buy XEQT” has transcended financial advice and become a cultural shorthand. Somebody posts a complicated question about optimizing their portfolio with seven different funds? “Just buy XEQT.” Somebody asks whether they should try to time the market? “Just buy XEQT.” Somebody is agonizing over whether to add a small-cap value tilt? “Just buy XEQT.”

It is said partly in jest, but it works because it is genuinely good advice. The simplicity is the feature, not the bug. And the meme quality made it spread. Every Reddit thread, every Twitter exchange, every group chat where someone typed “just buy XEQT” was free, peer-to-peer financial education reaching people who would never have read a financial planning textbook.

One Ticker Solves the Portfolio Construction Problem

This cannot be overstated. XEQT holds over 9,000 stocks across 49 countries. It covers Canadian, US, international developed, and emerging market equities. It rebalances automatically. It is globally diversified in a way that would have required significant research and ongoing maintenance to replicate just a few years ago.

For a generation that values efficiency and hates unnecessary complexity, one-ticker simplicity is enormously appealing. You do not need to understand modern portfolio theory. You do not need to debate the merits of overweighting or underweighting Canada. You do not need to rebalance annually. You just buy XEQT and get on with your life. The simplicity is the whole point.

Auto-Invest Made It Set-and-Forget

Wealthsimple’s auto-invest feature – which lets you automatically purchase a set dollar amount of XEQT on a recurring schedule – was the final piece of the puzzle. Set it up once, link it to your payday, and forget about it. Your XEQT position grows automatically with zero ongoing effort.

This is the investing equivalent of a pension deduction. Money leaves your account before you can spend it. It goes into a globally diversified equity portfolio. You do not have to make any decisions. You do not have to log in and place a trade. The entire investing process has been reduced to a one-time setup that takes about five minutes.

5. What Gen Z Is Learning from Millennials

Here is something I find genuinely exciting: Gen Z investors – roughly those born from 1997 to 2012, currently in their teens to late 20s – are skipping steps that took millennials years to figure out.

Skipping the Stock-Picking Phase

Many millennials went through a phase. We read about Warren Buffett. We tried picking individual stocks. We bought shares of companies we liked as consumers and called it “investing.” Some of us made money on a lucky pick and mistook luck for skill. Eventually, most of us came around to index investing after losing money, underperforming, or simply realizing we did not have an edge.

Gen Z investors, by and large, are skipping that phase entirely. They are starting with XEQT. The message – passive investing has won – has been so thoroughly disseminated through social media, YouTube, and Reddit that many 20-year-olds today have internalized it before they ever place their first trade.

The FHSA + TFSA + XEQT Playbook

For Gen Z Canadians entering the workforce in 2023 and beyond, a clear, standard playbook has emerged:

1. Open an FHSA – contribute $8,000/year for the tax deduction, invest in XEQT, use it for a future home purchase (or convert to RRSP if you never buy)
2. Max your TFSA – contribute the annual limit, invest in XEQT, let it grow tax-free forever
3. RRSP if there is room – especially if your employer offers matching
4. All of it in XEQT – one fund, globally diversified, lowest possible fees

This playbook is being shared so widely on social media and in online communities that it has become almost universal among financially engaged 20-somethings. It is remarkably sophisticated for a generation that grew up being told they were bad with money.

The Meme Stock Phase Was Brief

Yes, there was GameStop. Yes, some Gen Z investors got swept up in the meme stock mania of 2021. But here is what the alarmist headlines missed: for most young investors, the meme stock phase was brief and educational. They put a small amount of fun money into AMC or GME, rode the rollercoaster, learned what volatility actually feels like, and then quietly moved their real money into XEQT.

The meme stock era did not create a generation of degenerate gamblers. It created a generation that learned – viscerally, through experience – the difference between speculation and investing. And most of them chose investing.

6. The Counter-Argument: Is There a Downside to Everyone Buying XEQT?

Whenever a trend becomes this widespread, smart people start asking: “But what if everyone does it? Does it break something?”

It is a fair question. Let me address the main concerns honestly.

“Passive Investing Creates Market Distortions”

The argument: If everyone buys index funds, nobody is doing the fundamental analysis needed to price stocks correctly. Capital gets allocated based on market cap rather than merit. Bad companies get investment flows just because they are big.

This concern has been raised by active managers for over 20 years. And it is theoretically valid – at some extreme, if literally 100% of money were passively indexed, markets would lose their price discovery mechanism.

But we are nowhere near that extreme. Passive investing currently represents roughly 40-50% of total equity fund assets globally, depending on how you measure it. Active trading still dominates daily volume. Hedge funds, institutional investors, and individual stock pickers are still doing price discovery every single trading day. The market’s price-setting mechanism is alive and well.

Moreover, as more money moves to passive, the opportunity for skilled active managers actually increases – there are fewer competitors for the same mispricings. The market is self-correcting. If passive investing ever truly “broke” price discovery, active management would become more profitable, money would flow back to active, and the equilibrium would restore itself.

“Market-Cap Weighting Means Too Much Mag 7”

A more specific version of the concern: XEQT is market-cap weighted, which means the largest companies – Apple, Microsoft, NVIDIA, Amazon, Alphabet, Meta, Tesla (the so-called “Magnificent 7”) – represent a disproportionate share of the portfolio. If these stocks are overvalued, XEQT investors are overexposed to the eventual correction.

This is worth thinking about, and I have written about it separately. But a few points:

• Market-cap weighting means XEQT always reflects the market’s current consensus about value. You are not making a bet on specific companies – you are owning the market.
• XEQT is globally diversified across 49 countries. The Mag 7 represent a significant chunk of the US allocation, but XEQT also holds thousands of mid-cap, small-cap, international, and emerging market stocks that have nothing to do with Big Tech.
• If the Mag 7 decline, their weight in the index automatically decreases. You are not stuck holding them at their peak weight forever. This is the beauty of market-cap weighting: it is self-adjusting.

The Bottom Line on These Concerns

Every investing approach has theoretical risks. The risks of passive indexing are well-studied, well-understood, and – in the considered opinion of most academic finance researchers – far less concerning than the risks of the alternative: paying high fees for active management that statistically underperforms.

The concerns about passive investing have been raised consistently for 20+ years. During that time, passive investors have outperformed the vast majority of active investors. At some point, the “but what if passive breaks the market” argument starts to sound a lot like the active management industry whistling past the graveyard.

7. What This Means for Your Portfolio

If you are reading this and nodding along – if you already hold XEQT, or you are about to start – here is what I want you to take away.

You Are Not Following a Fad

It might feel trendy. It might feel like you are just doing what Reddit told you to do. But the millennial embrace of low-cost index investing is not a fad. It is a structural, generational shift backed by decades of academic evidence, enabled by technological disruption, and driven by rational economic self-interest.

Your parents’ model – high-fee mutual funds, conflicted advisors, complex portfolios – is the historical anomaly. Low-cost, diversified, passive investing is the norm that the financial industry should have delivered all along. Millennials did not invent something new. They demanded what should have existed from the start.

Keep Investing Through Everything

The XEQT generation’s biggest test is not choosing the right fund – you have already done that. The biggest test is sticking with it. Markets will crash. Your portfolio will drop 30% to 40% at some point. The financial media will scream that this time is different, that passive investing is broken, that you need to sell and move to cash.

You do not need to sell. You need to keep buying. The investors who come out ahead over 20-to-30-year periods are not the ones who picked the best fund. They are the ones who kept investing consistently through every crash, every correction, every recession, and every scary headline.

Set up auto-invest. Do not look at your portfolio more than once a quarter. And when the crash comes – not if, when – remind yourself that you own 9,000+ companies across 49 countries, and that every previous crash in market history was eventually followed by a recovery to new highs.

The Generation That Ignores the Noise Wins

There has never been more financial noise than there is today. Social media, financial news networks, podcasts, newsletters, stock-picking influencers, crypto promoters – all of them competing for your attention and trying to convince you that you need to do something with your portfolio.

You do not. The entire point of XEQT is that you can ignore all of it. You have already made the only decision that matters: invest in a low-cost, globally diversified equity portfolio, consistently, for the long term. Everything else is noise. The generation that learns to tune it out – that refuses to tinker, trade, or time the market – will build more wealth than any generation before it.

8. Being “Basic” Is Actually the Smartest Move

There is a reason “just buy XEQT” became the rallying cry of a generation. It is not because millennials are lazy. It is not because we do not understand investing. It is because we understand it better than our parents did – and we realized that simplicity is not the starting point on the way to a sophisticated portfolio. Simplicity is the sophisticated portfolio.

The data backs this up overwhelmingly. The evidence has been clear for decades. Low-cost index investing outperforms the vast majority of alternatives over the long run. Every layer of complexity you add – active management, stock picking, market timing, sector rotation, tactical allocation – is more likely to hurt your returns than help them.

Being “basic” with your investments – buying XEQT, setting up auto-invest, ignoring the noise – is not a compromise. It is the mathematically optimal strategy for the vast majority of individual investors. It frees up your time, your mental energy, and your emotional bandwidth for the things that actually matter: your career, your relationships, your health, your life.

The XEQT generation figured this out earlier than any generation before them. Not because we are smarter. Because we had access to better information, better tools, and better products – and because we grew up watching the old model fail.

If you are holding XEQT right now, you are not following a trend. You are part of a permanent shift in how Canadians build wealth. The best thing you can do is keep going. Keep contributing. Keep ignoring the noise. The boring, basic, “just buy XEQT” approach is going to look very, very smart in 20 years.

And if you have not started yet? There has never been a better time. The tools are free. The information is free. The best investing app in Canada will let you open an account in minutes and buy XEQT with no commissions. You can switch from mutual funds to XEQT in an afternoon. The only thing stopping you is starting.

Welcome to the XEQT generation.